The "must reads" header on the tech media site Gigaom could have skipped the three items listed and simply run the note from company management--one that ultimately is far more than media inside baseball:

A brief note on our company

Gigaom recently became unable to pay its creditors in full at this time. As a result, the company is working with its creditors that have rights to all of the company's assets as their collateral. All operations have ceased. We do not know at this time what the lenders intend to do with the assets or if there will be any future operations using those assets. The company does not currently intend to file bankruptcy. We would like to take a moment and thank our readers and our community for supporting us all along.

-- Gigaom management

The tech media industry has been buzzing since the word hit. One after another, Gigaom writers had spilled their professional grief on Twitter.

Founder Om Malik, who left the company a year ago for a job at early stage VC True Ventures, wrote on his personal blog, "Business, much like life, is not a movie and not everyone gets to have a story book ending." At this point, it's impossible to tell from the outside, and maybe from the inside, what will happen with projects already in motion.

Gigaom was heavily into running events and producing paid research, both of which presumably should have brought in the necessary cash to help support and underwrite the main website that embodied the company's brand. But, apparently, it wasn't enough.

Gigaom isn't the first tech site to feel financial rocking. Last fall, Say Media sold its sites, including xoJane and tech site ReadWrite, to concentrate on its content management system and selling ads for other publishers. The latter would fall into the popular category of adtech, using automation to bring greater efficiencies and wring more costs out of the online advertising business.

There's nothing new in media properties changing hands. Re/code was pulled out of The Wall Street Journal by founders Walt Mossberg and Kara Swisher to follow a more independent path with their own investors, for example. But when some of the sites that were established get shaken, it's a concern bigger than a media insider game.

For those who remember too many details of the bursting tech bubble in the early 2000s, this might cause a shudder. When the giant Ponzi scheme of companies laughing at the idea of revenue and then going public began to fracture, one of the clear signs was the impact on the media that covered them. As massive inflows of investor cash dried up, so did the ad spending spigot.

Once again there's a bit of that old aroma of burning money in the air. There are companies like Box that had to close an IPO because even a pile of investment cash lasts only so long when it's being spent quickly. Venture capitalist Fred Wilson mentioned "sky high" burn rates. "We have multiple portfolio companies burning multiple millions of dollars a month," he wrote. "Thankfully it's not our entire portfolio. But it is more than I'd like and more than I'm personally comfortable with."

Another tech VC, Bill Gurley, said last fall that Silicon Valley was reminding him of the late 1990s. "No one's fearful, everyone's greedy, and it will eventually end," he told The Wall Street Journal. "And there are reasons, which might take all night to explain, why this business is cyclical over time, and the more chance you have to see different cycles and to see how it slips away, you can see it. ... In '01 or '09, you just wouldn't go take a job at a company that's burning $4 million a month. Today everyone does it without thinking."

Tech has a youthful spirit because it so often rests on the ideas and energy of the young. But so many of these people weren't old enough to have experienced the business implosion and, for both good and bad, the young often discount the limitations that those who are older see. Sometimes they are right in doing so. When they're wrong, the result can be bad, indeed. With all sympathy to the employees of Gigaom, here's hoping that the company's failure was a singular problem with sales or its business model and not the precursor of a crash that could hurt many people.

Published on: Mar 9, 2015